Thursday, October 2 Close Update

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  CASH
Long-term timer:  CASH
Long-Cash Ratio:  0.193, fell -24% on Wednesday and -2% today.
% Long-rated stocks in database:  15.7%, FELL -4.2% on Wednesday and -0.8% today.

It's worthwhile to note that the present LCR of 0.193 means than for every 200 stocks that are rated "LONG", there are 1000 stocks that are rated "CASH".  This is incredibly oversold and we haven't been this low since November of 2012.  We can go lower.  In August of 2011, right in the middle of the recovery, we went as low as 0.095.

Slope Table:

Sea of red on the left side of the table, so no buy signal.  The only good indicator is on the right, and as you can see, we had a full day of green, e.g. the slope of the slopes all turned positive.  Continuing this trait is necessary to get a buy signal.

We do NOT have any indication of a buy signal at this time.

Cumulative Tick:

52-week New Lows still are dramatically outpacing 52-week New Highs.  This is inverted from what we want when we move long in the market.

As you can see in the middle plot, which is algorithmic views of buying/sell, we had a fairly strong selling market from about 10:00 to about 11:30.  European markets closed at 11:30, and then you can see that we were into a "normal" sideways market until about 12:30.  Whether Europe was selling US Equities is anybody's guess, but it makes sense given their softness right now (but correlation is not causality, so don't be so quick to draw that conclusion).  From about 12:30 to about 3:00 pm the markets experienced HEAVY buying, and we had a significant rebound for the day.  This is quite positive.

Key here for Friday is that we continue this buying process.

Note that the long-term moving average of the cumulative tick (red) is still negative in slope and falling day-over-day.  This is also inverse of what we want so there is no chance of buying on Friday.

Strategy.

I plan on taking Friday off and will not be buying stocks in any form.  A few of my dividend stocks have issued "New Cash" recommendations, so I will be closing those with a 1% trailing stop loss, GTC, effective after 9:45 or so.

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I'll post my watch list over the weekend.

Standard disclaimers apply.  Please do your own diligence and please take ownership for your actions.

Regards,

pgd

Tuesday, Sept 30th Close Update

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Timer Status:

Short-term Timer:  CASH
Intermediate-term Timer:  CASH
Long-term Timer:  CASH
Long-Cash Ratio:  FELL -7% to 0.260
% Long-rated stocks in database:  FELL -1.1% to 20.7%

Slope Table:

Mixed progress today in terms of the right-side of the table, but overall, bearish on the short-term.  The sea of red on the left side puts any chance of a buy signal out at least to Thursday at the earliest, and it's going to take a stellar day on Wednesday to make that happen.

Cumulative Tick:

52-week New Lows still dominate over 52-week New Highs.  No buying on the long side when this is the case.

We saw the instantaneous cumulative tick (white) cross the longer-averaged cumulative tick (red) from below, which was initially bullish, but it failed and we're back into a slightly decreasing slope on the longer-termed cumulative tick chart.  Again, no buying when this is the case.

The "bunching" of the moving average lines of the ribbon tells us that we're close to either breaking upwards (a potentially new run at the long side), or we're going to rejoin the drop in the indexes.  While we certainly can go down from here, we are very oversold at this point, so I'm not as bearish as I was a week ago.  We may still drift sideways and have a few attempts at a breakout before it occurs ... I don't know.  Your crystal ball is as good as mine.

Timer Table:

The table tells all I need to know -- Wednesday is another easy day.

Strategy:

Travel day for me, and luckily, there is no reason to watch the markets.

I'll be out playing late on Wednesday night, so no blog entry.  Next entry will be Thursday.

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Standard disclaimers apply.

Regards,

pgd

Monday, Sept 29 Close Update

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Timer Status:

Short-term Timer:  CASH
Intermediate Term Timer:  CASH
Long-Term Timer:  CASH
Long-Cash Ratio:  FELL -3% to 0.279
% Long-rated Stocks in Database:  FELL -0.6% to 21.8%

Slope Table:

The LCR fell another -3% to 0.279, indicating that out of 279 long-rated stocks in the database, 1000 are rated for cash.  This value -- 0.279 -- is incredibly oversold, but we can go lower.  On 11/15/2012 we hit 0.233, and on 5/21/2012 we hit 0.181.  In both cases we had false starts to the upside, then clocked lower lows.

The right side of the table, which is the slope of the slopes shown on the left side, has two solid days of gains.  The right side MUST show significant green before the left side, and we have this setup with today's action.  Whether it will translate into a buy signal is unknown -- we certainly do not have one this evening.

We are approaching a possible buy signal, but it does not exist as of this data.  We need the left side 2d, 3d, and 5d to turn green.

Cumulative Tick Chart:

52 Week New Lows still are outpacing 52 Week New Highs.  Until this changes it makes no sense to buy stocks unless you can magically cherry pick winners that will buck the trend -- I can't do so with any consistency so I don't do it anymore.

In terms of buying and selling under algorithmic control, we ended the day nearly net neutral.  The early morning selloff was on the indexes only -- the selling pressure did not last long and buying kicked in shortly after the open.

The longest moving average on the cumulative tick chart significantly moderated the downward slope of the previous days -- simply look at the red trace.  Further, despite the indexes all being in the red, you can see that the real-time cumulative tick made significant upward progress today -- more stocks ended on a positive advance in the bid/ask after the tick transition, and on the whole, this is what we need to see.

I'm specifically looking for the white trace to move above the red trace, and then all the other moving average ribbon lines will turn positive and move above the red trace.  When this occurs we'll have our first indications that the move to the upside is real and that the bottom may be in.  This method is not full proof -- we need other indicators to confirm -- but it is necessary for a sustained advancing market.

Equity Capture:

Most of my unrealized profit was realized today -- you can see the dramatic vertical climb of the equity curve as the remaining positions were stopped out.  Again, this is by design.  I'm almost entirely in cash now (about 10% invested), so powder is nearly 100% dry until we get the next signal.

Here are my remaining holdings:

Strategy:

Tuesday is another easy day.  I have one open sell order -- SIAL -- and the remaining positions are only triggered by GGT recommendations.  I have no buy orders.

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Standard disclaimer applies.

Regards,

pgd

Friday, September 26th Close Update

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer: CASH
Long-term timer:  CASH
Long-Cash Ratio:  FELL -1% to 0.289
% Long-rated stocks in Database:  FELL -0.2% to 22.4%

Slope Table:

Cumulative Tick Chart:

Holdings:

Equity Capture:

Leaders:

Commentary:

Despite the indexes moving up today (RUT +0.82%, DOW +0.99%, NAS +1.02%, SPX +0.86%), the long-cash ratio (LCR) fell -1%, indicating that the equally-weighted world and the market-cap-weighted indexes are out of sync.  I don't believe the indexes unless I'm invested in the IWM, DIA, QQQ, or SPY; everything else may or may not correlate.

The long-cash ratio is now 0.289, meaning that for every 29 stocks that are rated LONG, 100 are rated CASH.  The trend is falling.  I do not buy when this trend is falling.

Correspondingly, the number of long-rated stocks fell slightly to 22.4%.  There are 3040 stocks in the database as of tonight.  This is not what I would expect when all the indices are rising.

The left side of the slope table shows a sea of red.  All the slopes of the moving averages for the indicated time frames are downward, even the shortest ones.  I do not buy until the 2d, 3d, and 5d turn green, and the earliest this could happen is Monday with a Tuesday buy signal (because I evaluate in the evenings).

The NYSE continues to show more 52-week New Lows than New Highs, by a wide margin.  I do not buy when this is the case.

At approximately 1:50 pm today we started to see buying algorithms kick in, which lasted for almost exactly 1 hour (really).  During this period the NYSE saw, on a minute-over-minute basis, a net 500 stocks per minute ending their transaction on the tick with the bid/ask moving upwards.  The straight line in the cumulative tick chart (middle plot) tells you that these were buying algorithms.  This is encouraging, but it is not sufficient for me to jump into the market.

Also on the cumulative tick chart the long-term moving average (red) of the cumulative tick has a downward slope, but it is a bit more relaxed than it has been.  This too is encouraging, but again, not sufficient.  The real-time tick (white) needs to be above red for me to consider buying.

A number of positions sold off today, capturing more equity.  Green dots indicate new highs for the equity curve, and you can see we're generating many right now.  This is by design.

1% trailing stop losses are set on all positions EXCEPT my dividend portfolio, which uses GGT purely for timing.  There currently is about $30K open profit that could be captured if I sold at Friday's closing prices.  These positions will move to cash if they fall more than 1%, and the orders are GTC.  If we get a buy signal before they execute then I will remove the pending sell orders and these positions will form the basis of the next round of the cycle.

The leaders list is posted above.  Here are the stocks for your own evaluation:

AGN
AMRI
APT
ARII
BABY
BFR
BITA
CAAS
CBK
CORE
CP
ECHO
ENPH
EW
FB
FNHC
GIII
GILD
HBI
HEES
HOLI
HTLD
IDTI
INFN
KNX
LDL
LUV
MAR
MFRM
MNST
MPET
NXPI
OTEX
OVTI
PJC
PL
PRSC
PRXL
RCL
RFMD
RLGT
SAVE
SHPG
STZ
SWKS
TMH
TUES
WGP

These are not recommendations -- they are simply provided so you can see which stocks I am following.  Do your own diligence please.

A number of these stocks are seeing a significant inflow of large effective volume (www.effectivevolume.com).  Large effective volume signifies large-lot buying over time, and this typically is institutional buying.  I would be watching the following closely on Monday if we had a buy signal (we do NOT, so this point is moot):

LDL

RFMD

SHPG

HEES

HOLI

SWKS

IDTI

GIII

TUES

AGN

BFR

FB

PRSC

A few of these broke out today on higher volume:  HEES, AGN, PRSC.  SHPG and IDTI never fell below the 50% candle that was generated Thursday, which is generally a good sign.

Strategy:

Monday is an easy day.  No buying for me.  Sell orders are placed.  I most likely will not be watching the markets too closely.  

Monday night's eval of the markets will be interesting.

Make it a great weekend.

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As with all my postings, you are responsible for your own decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd

Moving to Cash - Thurs, 9/25 Update

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  CASH
Long-term timer:  CASH
Long-Cash Ratio:  0.291, falling -23% from yesterday
Percent Longs in Database:  22.6%, fell -4.9% (a large amount given there are over 3000 stocks)

Slope Table:

Cumulative Tick Chart:

Timer Table:

Commentary:

The long-term timer has transitioned to CASH, so now the model moves to 100% cash.  

Yes, we are quite oversold -- in fact, we are the most oversold that we've been in some time.  We could go lower though, or we could rocket northward.  Your crystal ball is as good as mine.

The Long-Cash Ratio fell a huge amount on a day-over-day basis: -23% downward, and this is statistically significant.  Today could have been a capitulation or exhaustion sell-off, meaning we're near a bottom, or it may continue to erode.

The Cumulative Tick chart is nearly the same as yesterday so I'll simply move on with no comment.  Read yesterday's entry if you want to better understand the chart.  Simply put, bearish on all time frames, especially short-term.

The minimum length that we've stayed with the long-term timer in "CASH" is 8 days, meaning, that after about 5 days we started heading upward.  The short-term timer will be the first to signal a return to buying, then the intermediate-term, then the long-term.  We'll see what happens here.

Strategy:

I'm placing 1% trailing stop loss (TSL), GTC, effective at 9:45 a.m. ET, on all open positions.  I still have several:

Time to raise cash in earnest.

We may reverse here since we're so oversold.  If this is the case, and we see the short-term timer move to the LONG status, and if any open sell orders exist, they will be cancelled.  If a buy signal is generated in the next week the investment level will be either 25% or 33% invested, depending upon what the LCR is doing.  More on that in future blogs.


I'm not screwing around here -- time to lock in remaining profits ($35K and change as I write) and wait for the market to figure out what it wants to do.


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As with all my ramblings, you are responsible for your own trading/investing decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd

Wednesday, Sept 24th Update

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  CASH
Long-term timer:  LONG (by a thread, by the way)
Long-Cash Ratio:  0.380, falling -4% from yesterday and 14th decreasing day of last 16
Percent Longs in Database:  27.5%, fell another -0.9%

Slope Table:

Cumulative Tick Chart:

Commentary:

We still have a sea of red on the slope table -- obviously not good for being long in the market.  The Long-Cash Ratio has fallen to 0.38, so for every 38 stocks that are rated "long", there are 100 that are recommended to be in "cash".

Buyer beware.

There is no question that we are oversold.  We can go lower though.  Yesterday's "strength", and I use the term loosely, was not pervasive across all market segments, and was largely window dressing as far as I'm concerned.  As evidence of this I provide the right side of the slope table.  The right side shows that the longest time frames are still accelerating downward, and until we get several strong days (green) for all measured time frames, it is not safe to buy stocks en masse.  Yes, feel free to cherry pick, but I'm a longer-term investor, not a day trader.

Regarding the Cumulative Tick chart, the number of 52 week New Highs is well below the number of 52-week New Lows on the NYSE and this is a huge stop sign for me.  I don't care how oversold we are, until this reverses, I'm not buying.  Period.

A good initial sign is that there was strong buying on the NYSE yesterday.  Not widespread, but for the measured TICK, where I need at least 500 stocks per minute ending the transaction with a bump upward in price, we got it.  We need more of this.

Lastly, the longer-term moving average (red) of the Cumulative TICK is still negative.  Again, bad news.  Until the instantaneous TICK (white) moves above this, it's better to be on the sidelines.

Strategy:

I'm still operating on a 50% cash position.  Stocks and ETFs are being closed, per my GGT recommendations that I calculate nightly.  Many of these have positive balances, and hence, I'm capturing equity:

Green dots above represent new highs for equity, and this is a capture of my TradeStation blotter for all accounts.

I have several pending sell orders for today.  The 1% trailing stop loss, active after 9:45 am ET, works well to capture rising equity prices but skip the opening clearing of the book.  Being sold are full positions in SSO, SPY, ROP, XLB, SIAL, XLF, ABT, and CP.

Check the GGT stock listing, available in the Dropbox folder for a clearer view of GGT ratings.

I have no buy orders pending.  Of course, I have a watch list, and I keep it updated, but I'm not buying anything today.

The earliest that we could see a short-term buy signal would be today, if it is an awesome, +2-3% day across all equity markets (not likely), or back-to-back good days today and tomorrow.  Possible, but who knows?  Your crystal ball is as good as mine.

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As with all my ramblings, you are responsible for your own trading/investing decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd

Monday, September 23rd Update

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  CASH
Long-term timer: LONG
Long-Cash Ratio:  fell -23% to 0.519.  STATISTICALLY SIGNIFICANT MOVE
Number % Long Recommended Stocks: 34.2%, dropped -6.1%

Timer Table:

(right click on the image to open in a new tab or window)

(right click on the image to open in a new tab or window)

Commentary:

A significant drop today.  The drop of the long-cash ratio was statistically significant, and from other indicators that I employ, was accompanied by volume.  Pay attention; I'm continuing to raise cash.  Last calculations show that I have about 39% invested and the rest in cash.

Today was a severely bad day for the Cumulative TICK chart.  Selling algos were employed early and continued thoughout the day, exceeding 500 stocks being net sold per minute for over 2/3rds of the day.  The white and red traces tell you everything you need to know.

Strategy:

A number of stocks transitioned to "New Cash", and I'm selling.  No buying.

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Standard disclaimers apply.

Regards,

pgd